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How Businesses Are Going Further to Make International Supply Chains Work for Smallholder Farmers

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How Businesses Are Going Further to Make International Supply Chains Work for Smallholder Farmers HOW BUSINESSES ARE GOING FURTHER TO MAKE INTERNATIONAL SUPPLY CHAINS WORK FOR SMALLHOLDER FARMERS A Fairtrade Foundation report February 2013 CONTENTS Executive summary ............................................................................... 4 I. Introduction and context .................................................................... 8 II. Methodology .................................................................................... 10 III. Summary of the perspective of small farmer organisations ............ 11 IV. Fairtrade, small farmer organisations and a sustainable food system .................................................................................... 12 V. Key insights from stakeholders on engaging with smallholder farmers ........................................................................ 14 VI. How businesses can go further ....................................................... 16 VII. Conclusions and next steps ........................................................... 26 Case studies: 1. Tate & Lyle Sugars – How organised farmers add value in Belize 2. Cafédirect – Business from scratch in Saõ Tomé 3. Ben & Jerry’s – Promoting supply chain partnerships globally 4. Marks & Spencer – Helping smallholder tea farmers capture value in Kenya 5. Traidcraft – Developing added-value tea partnerships in Malawi 6. Liberation – Helping smallholder nut producers meet EU food safety requirements in Malawi Appendix I The Fairtrade standards framework .................................. 40 Appendix II Roles and responsibilities in the Fairtrade system ............ 41 Appendix III List of interviewees .......................................................... 43 Acknowledgments: This report was written by Ian Bretman and edited by the Fairtrade Foundation. Paul Holland, Simon Appleby, Dr Stephanie Hime, Lois Watts and George Rodwell at KPMG conducted the company interviews and are supporting this project on a pro-bono basis. The Fairtrade Foundation wishes to thank the many individuals and companies who agreed to take part in the research and also acknowledges the support of Twin and The Co-operative 2 How businesses are going further to make international supply chains work for smallholder farmers 3 Group in the first stage of this project. EXECUTIVE SUMMARY This paper comes at a time when there is farmers and companies can establish sustainable Key insights licensees towards deeper commitment, although they increasing recognition among business and equitable relationships across highly demanding are very much in tune with the development aims of and government in the role smallholder and fast-moving international supply chains. This the latest standards for smallholder organisations 3 4 farmers can play in a truly sustainable paper builds on an earlier policy report by Twin that 1. A holistic view of supply chains (see Appendix 1). considered the experience and perspective of small food and farming system. farmer organisations and contributed to a multi- The supply chains that connect smallholders to As good practice in this area becomes established, stakeholder forum in May 2012. This second phase mainstream consumer markets are often a web this could be reflected in a raised minimum threshold For the past thirty years it has been hard for of the work has been developed through discussions of interdependent relationships and there is an for businesses, provided the cost or complexity of smallholder farmers and their partners to challenge with commercial stakeholders and analysis of their increasing need to take a holistic view of their internal certification was not unduly increased; this ensures the assumption that urbanisation of population feedback by senior management at the Foundation. structures and to understand the interdependencies. a level playing field in which the committed are not and the industrialisation of agriculture are the only This is especially important when retailers and undercut by the merely compliant. However, this is an pathways for development and this view was a major The interviews and discussions undertaken for this large brands use intermediaries to manage their ongoing process and some companies will always be cause of the erosion of the technical, financial and report have highlighted the exciting opportunities relationships with smallholder groups, which can limit piloting work beyond minimum standards and would marketing services on which smallholder farmers that are emerging for the Fairtrade Foundation to their understanding of how their actions may affect like to communicate this to consumers. While the depended. These assumptions are still prevalent facilitate deeper collaboration that furthers the smallholders, and vice versa. While buying direct from FAIRTRADE Mark plays a vital role in providing a clear in many countries but there is growing interest in goals of smallholder organisations, businesses, smallholders may not always be practical in every and specific guarantee that helps consumers identify an alternative and the feedback from commercial consumers, civil society agencies and donors. Most supply chain, there is increasing recognition of the products that meet its standards from other products stakeholders surveyed for this report indicates a important for its mission to support smallholders need to have more direct communication and sharing in the market, new ways of differentiating the brands greater shared perspective on the major global to take more control over their lives and determine of information among all the links of the chain, with that ‘go further’ than the minimum would be welcome. sustainability challenges, including the need for social their own futures, at a time when more companies the aim of using greater transparency to strengthen and environmental justice, than at any time since the are recognising the need to invest in smallholder mutual accountability. FAIRTRADE Mark was launched in 1994. farmer initiatives, is to highlight the important role of democratic organisations, such as co-operatives, in 2. Aligning the aims and objectives of all parties In the five years to 2012 the Fairtrade Foundation representing their members in planning, prioritising has been pursuing an ambitious strategy towards and implementing improvements. Examples identified While the different stakeholders in supply chains its vision that everyone, through their work, should in this report illustrate how partnerships with, and may share many long-term objectives, there are be able to maintain a decent and dignified livelihood investment in, smallholder organisations improves the also significant differences. For most businesses and fulfill their potential. The Tipping the Balance chances of interventions also delivering the economic smallholder farmers are little more than the first link strategy has extended the scope of Fairtrade to more return that business needs as well as supporting the in their product supply chains, whereas farming small farmers and workers and increased impact aims and aspirations of the families and communities families view trade not only as a means of generating for those already engaged with Fairtrade through concerned. This is the ‘win-win’ that typifies Fairtrade income but also of sustaining and developing the impressive growth in awareness of the FAIRTRADE at its best, reinforcing the business case for Fairtrade social and cultural fabric of their communities. Mark and sales of Fairtrade products. In 2011, public while bringing a business perspective to sustainable The earlier report identified different smallholder awareness of the FAIRTRADE Mark in the UK reached development work. strategies of strengthening their existing market 78 per cent and sales of certified products in the positions, diversifying their production, transitioning UK amounted to £1.3 billion1, generating over £20 to new ways of income generation, describing million in Fairtrade Premium payments to producers. these, respectively, as ‘hanging on, stepping up Over 300 of the 991 producer organisations certified and stepping out’. If the differences as well as the worldwide to international Fairtrade standards supply commonalities are not adequately understood there the UK market, which by most measures is the most is a risk that investments, for example in increasing successful of its kind in the world.2 productivity or quality, may not be aligned with the needs and priorities of smallholder groups and their In the next phase of its work, the Fairtrade wider communities. This can limit the chances of their Foundation will continue to scale up its work with success or undermine the efforts of smallholders to producers and companies, but will also explore make their own choices. broader, qualitative change in trading relationships between UK businesses and smallholder farmers 3. Beyond minimum standards in Africa, Asia and Latin America that support the development needs and aspirations of rural The activities needed to address points 1 & 2 sit families and communities. An important part of the firmly in the area beyond compliance with minimum Oliva Kishero on her coffee farm in Uganda preparation for that work is to look at how smallholder requirements of Fairtrade standards for traders and 4 How businesses are going further to make international supply chains work for smallholder farmers How businesses are going further to make international supply chains work for smallholder farmers 5 Going further: information to understand problems and building
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